Quarterly Tender Inflation Rises by 1.1% as Market Turns says BCIS

TENDER PRICES rose by 1.1% between the first and second quarters of the year, and by 4.9% over the year to Q2, 23, according to the early estimate for the BCIS All-in Tender Price Index (TPI).

Overheads and profit at 5.3%, slightly down on 5.5% last quarter.

Turning Point

The market is reported to be at a turning point, with both costs and work slowing down. There is more competition, but contractors are reportedly still cautious when choosing projects.

The slowdown in the private sector, with developers pausing projects, means that the private sector supply chains are now focusing on the public sector increasing capacity and competition.

The BCIS panel reported stabilising materials cost inflation, however, there are still pressures in the M&E sector. Shortages of skilled labour, putting pressure on rates, continue. However, the heat is coming off as the growth in agency pay rates slows down, according to both Hays/BCIS site wage cost indices, as well as weekly pay rates reported by Hudson Contract.

Concerns about contractors’ insolvencies continue, as the cost of finance and fixed-price contracts are putting some contractors at risk.

The impact of the second staircase rule in high rise buildings is another concern. Large regeneration projects that include high-rise residential developments (more than 10 storeys) have stopped. The second staircase rule which is currently compulsory in London and Scotland is expected to impact residential developments in larger cities, specifically London, Manchester, and Birmingham.

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